The Justice Department wants to know what happens to your local movie theater if Warner Bros. Discovery Inc. (WBD) changes hands. Federal lawyers have been calling in the country's largest theater chain operators to understand whether a sale would shrink the number of films hitting the big screen or otherwise impact moviegoers.

According to a Bloomberg report on Wednesday, the DOJ's primary worry revolves around Netflix Inc. (NFLX) and its commanding position in streaming. The streaming giant has historically sent only a limited selection of films to theaters, and when it does, they typically get shorter theatrical windows than traditional studio releases. That approach has made Hollywood nervous for years.

Netflix co-CEO Ted Sarandos apparently got the message. He met with several theater chain CEOs in Los Angeles last week to smooth things over. The company has also committed to giving Warner Bros. movies an exclusive 45-day theatrical run before they hit streaming platforms.

Both the Department of Justice and Netflix declined to comment.

The Bidding Battle Heats Up

This regulatory interest comes as Warner Bros. plays hardball with potential buyers. The company rejected Paramount Skydance's latest takeover attempt on Monday, giving them until February 23 to submit a "best and final offer." Meanwhile, Netflix has the right to match any competing bid. Paramount's informal proposal of $31 per share apparently caught the Warner Bros. board's attention.

As the auction intensifies, analyst Gary Black is betting on Netflix to come out on top. He believes Netflix shares could climb back to the $100 mark even if Paramount Skydance (NASDAQ: PSKY) ultimately wins the bidding war.